Ecosystem Economics

August, 2010
By Ilmas Futehally

It is not easy to miss the signs of destruction of nature where ever one goes. Tall skyscrapers and the large cranes building them are a constant feature of every city in the world. Mountains of granite and rocks are being flattened, trees cut and rivers diverted to provide the raw materials for the construction industry. It is estimated that about 90% of all non-fuel mineral use and a large proportion of timber use goes into the construction industry. It is easy to fuel economic growth, especially in the short term with no regard to the damage that it is causing on longer term environmental and social sustainability. What we need to find are imaginative and constructive solutions, that not only fuel growth and economic development, but also restore to the earth some of her natural bounties. 

There have been some experiments for restoration of forests and mangroves that have yielded multi-million dollar returns. These are the projects that need to be highlighted, as a recent report by the UN Environment Programme titled Dead Planet, Living Planet: Biodiversity and Ecosystem Restoration for Sustainable Development has done. Of course, what we need to do first is preserve the ecosystems that we already have, but given the fact that over 60% of them are already badly degraded, we need to give restoration activities a priority. 

Poverty, unemployment and land degradation is a vicious circle that has been in evidence in the last few decades. The fact is that this circle can be reversed by restoring, repairing and rehabilitating ecosystems which can lead to creation of millions of jobs and lifting families out of the poverty trap. 

An example of this reversal is shown in the example of the restoration of degraded grasslands in and around the rivers that flow in South Africa's Drakensberg Mountains. This region is home to 299 recorded bird species which makes for about 40% of all non-marine avian species in southern Africa. A study estimates that the project will bring river flows back during the crucial winter months to a tune of up to 4 million cubic metres of water (MCM), apart from the added advantage of storing carbon. The project is estimated to cost Euro 3.6 million over seven years with an annual cost of Euro 800,000 for its management. The returns are expected to be Euro 6 million a year while generating over 300 permanent jobs and 2.5 million person-days of work during the restoration phase. While I am no economist, it looks like a pretty good rate of return to me! 

In fact, we if begin to factor in ecological costs and benefits to all projects, be they large infrastructure projects like roads and dams or smaller projects of building a farmhouse, the economics of it can begin to look a lot different. It is estimated that ecological infrastructure of the planet generates services of between $21 trillion to$72 trillion a year. Just for comparison, the Gross World Income last year was $58 trillion. Therefore, if this cost is taken into account when determining accounts, the balance sheet and projected profits of many projects would look fundamentally different than they do today. 

The UNEP report mentioned above lists out a number of areas in which ecological services provide direct benefits, which are measurable in dollar terms. These include $23 trillion for storm protection in the United States, an average of $33-$153 per household in Indian villages located near mangroves that serve as storm barriers, at least $153 billion for pollination costs to agricultural plants by bees and insects, and large savings in pesticides due to natural pest control.

Of course, most of the services provided by ecosystems are not measurable. How does one put a value to the views of the valleys, the worth of water or the peace of the peaks? We need to make sure that we protect what we have and restore what is still repairable to ensure that the world we live in still has things that do not have price tags attached to them.

Related Publications

Related latest News

  • February 16, 2016

    Big Questions of Our Time: The World Speaks

    read more
  • December 2015

    Brazzaville Foundation Meeting

    read more
  • October 2015

    SFG Meeting with Didier Burkhalter

    read more

Related Conferences Reports